Color on Tower Prices

As previously reported, American Tower made two very big international acquisitions sector over the weekend. The company agreed to purchase ~6,480 towers from TIM Celular S.A. in two transactions, as well as agreed to acquire Bharti Airtel Limited’s ~4,800 towers in Nigeria. We reached out to Caleb Stein, an analyst at Wells Fargo, for some color on the valuations. The Brazilian tower transaction was 16.0x gross margin ($75 million) with AMT paying approximately $185,000 per tower totaling $1.2 billion at current foreign exchange rates. The Nigeria towers were ~16.7x EBITDA and other financial terms were not discussed. Continue reading here. 

American Tower Moves into Nigeria

American Tower was busy last week. On Friday, the announced their acquisition in Brazil,  and yesterday, the company reported they had entered into a definitive agreement with Bharti Airtel International for the sale of over 4,8000 communication towers in Nigeria. Airtel will be the anchor tenant on the portfolio under a lease with a ten-year initial term. “We are pleased to announce the launch of our operations in Nigeria while expanding our relationship with Airtel, one of the leading multinational operators in the world,” said Jim Taiclet, Chairman, President and Chief Executive Officer of American Tower. “With the largest population and economy in Africa and relatively underdeveloped wireless infrastructure, we view Nigeria as a tremendous growth opportunity. Further, we expect this investment to support our long-term objective of generating double-digit AFFO per share growth for our stockholders.” Continue reading here. 

American Tower Buys in Brazil

American Tower, who already owns over 6,900 towers in Brazil, is the buyer of Telecom Italia’s Brazilian unit as of Friday. This transaction is worth R$3 billion ($1.2 billion), according to Seeking Alpha. The deal, where AMT would be acquiring the 6,480 towers, was announced during Telecom Italia’s board meeting. According to Eric Johnsa at Seeking Alpha, the towers are expected to produce R$435 million/year ($171 million/year) in revenue, and R$191 million/year ($75 million/year) in gross margin. TIM has agreed to 20-year leases for the towers, and will act as their anchor tenant. “Similar to the U.S. we are seeing a very strong demand backdrop overseas especially in Brazil where we had another record quarter of commenced new business,” Tom Bartlett, EVP and CFO of American Tower said during the third quarter conference call on October 30. “Mobile data usage in Brazil is expected to grow 10 times over current levels by 2018,” Jim Taiclet, Chairman, President, and CEO said during the same conference call. Continue reading here. 

Crown Castle Merges With Crown Castle

Crown Castle stockholders voted to adopt the previously announced merger agreement with its wholly owned subsidiary, Crown Castle REIT. Crown Castle began operating as a REIT for tax purposes on January 1, and this proposal to complete the merger ensures the effective adoption of certain charter provisions that implement REIT-related ownership limitations and transfer restrictions related to its capital stock. The merger is expected to close no later than December 31, 2014, according to the company press release.

Dish on the Auction

The FCC’s AWS-3 auction that began last week has already surpassed $16.25 billion, according to Jonathan Chaplin at New Street Research, and Dish Network has been one of the heaviest spenders so far. Chaplin explained that prices for the paired spectrum have already passed $1/MHz-POP. If the bidding intensity holds they could be through New Street Research’s target of $1.50/MHz-POP today. “This has positive implications for DISH and negative implications for the carriers, supporting our theses in both cases. Investors that have pared back on DISH in the run up to the auction because of concerns over auction prices should be encouraged by the early bidding,” Chaplin wrote in a research note. It shouldn’t be entirely surprising that Dish is scooping up spectrum, the Wall Street Journal reported two years ago that Dish Network Charlie Ergen, co-founder and current Chairman of the Board, and former President and CEO of Dish Network, started assembling that spectrum for a total of about $3 billion half a decade ago. Continue reading here. 

Limited Carrier Tower Deals Left to Do

Jennifer Fritzsche, Senior Analyst at Wells Fargo, and her team had dinner with some of the partners of Media Venture Partners. MVP focuses on spectrum tower, fiber and M2M space transactions. According to a research note, the partners told the Wells Fargo team that after Verizon, who has 12,000 towers, and U.S. Cellular, who has 500 towers, there are little portfolios left of size. Continue reading here. 

Wireless and Telecom to Grow

Wireless industry analyst, Jeff Kagan, recently penned a column regarding AT&T and the future of the company, along with the wireless and telecom industries. “Growth will continue for AT&T and in fact the entire sector, but the path of that growth will expand within the wireless and telecom sector, and into new industries as well,” acceding to Kagan. “The kind of change I see is huge, and the kind of growth opportunity is also huge. The next several years could be very transformative for companies like AT&T, the entire telecom and wireless industry, and many other industries as well. As other industries change, they will move toward the wireless world. Continue reading here.